Aust firm buys NZ's biggest private rest home operator

By NZPA

Tuesday 12th July 2005

Just 18 months after buying Guardian Healthcare Group for $110 million, Pacific Equity Partners (PEP) has agreed to sell New Zealand's biggest private rest home operator for $300 million to Australian company DCA Group Ltd.

The rise in value can partly be explained by Wellington-based Guardian extending its portfolio just a month ago, acquiring the assets of Care and Independence.

That added Hillsborough Hospital and Remuera Life Care retirement village in Auckland, Mitchell Downs in Rotorua, the Care and Independence Hospital in Taupo and three rest homes in Christchurch to its asset base.

It already had 25 rest homes and hospitals with a total of about 1700 beds, when the Overseas Investment Commission approved a public takeover by PEP and Guardian management at the start of last year.

The DCA Group will be buying 32 homes and hospitals with 2163 residential aged care beds and 379 independent living units across New Zealand.

Guardian also has a home-based services division which provides in-home medical alarms to 11,000 homes.

DCA managing director David Vaux said Guardian chief executive David Renwick and senior management would continue to run the business in New Zealand.

Bryan Mogridge would remain as non-executive chairman, while Vaux and two others will join the Guardian board in New Zealand.

Vaux said that DCA was buying a "first rate company, with strong profitability and marketability".

Guardian had acquired two businesses since PEP became involved -- the second was the Haven Group -- but he wouldn't comment about what appears to be a healthy return for PEP.

"For us, we are very pleased to have acquired Guardian."

There was plenty of market demand for aged care beds in New Zealand, he said.

"We think the demand is going to grow and grow and if you have the expertise to manage well, you are going to do well.

"If you have the knowledge, you can get reasonable returns, but still maintain a high standard of care."

The acquisition would significantly expand the company's interest in the aged care sector, he said, giving it more than 5700 beds, units and apartments at 69 sites in Australia and New Zealand.

"The aged care industry fundamentals in Australia and New Zealand are very similar, both benefiting from an ageing population, high occupancy, and improving funding support from government," Vaux said.

The Government is relaxing the limits of the assistance it provides for elderly care and this is expected to fuel demand and boost Guardian's average occupancy rate of 90%.

The acquisition was expected to be earnings-per-share accretive in the first year of ownership, he said. The sale should be completed in two months, subject to Overseas Investment Commission approval.

PEP managing director Anthony Kerwick said DCA had acquired a strong business in Guardian.

"As a recognised leader in the quality provision of aged care services in Australia, DCA is clearly a good corporate home for Guardian."

PEP bought Whitcoulls last year. The Australasian private equity firm manages or advises over $500m of equity funds.

Private equity firms such as PEP invest in businesses across a wide range of sectors, try to improve them and often exit via sharemarket floats or trade sales. Before its sale to PEP, Guardian was owned by New Zealand shareholders, with a small minority of shares held overseas.

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